According to an expert cannabis economist, the U.S. market for hemp-derived cannabinoids has grown in value. However, it continues to be threatened by a patchwork of regulations and state bans that stunt growth and push production to other countries.
Beau Whitney of Whitney Economics said: “This hysteria about cannabinoids has a profound impact on the environment for fibers and grains.” Green Market Report Interview
Whitney’s study shows the hemp sector, including CBD and THC as well as CBN, CBG & related compounds has become a vigorous industry which rivals that of legal marijuana. In two years, the firm that he works for calculated that hemp-derived cannabinoids were worth between $21.3 and $35.8 billion with a middle point of $28.4 million.
Whitney said that, of that total market: “there were about $21 billion available for legal use and approximately $7 billion illegal.”
Whitney’s recent surveys in Arizona, Illinois Tennessee, and Texas have validated his projections. Whitney stated that the data was solid in states where she could collect data, and where sales were allowed. They’re confirmed to be conservative.”
The economist noted that it was difficult to accurately measure the legal hemp market as regulations are constantly changing.
Whitney stated, “Everytime I turn around, another state comes up with a new proposal for banning all this.”
Whitney’s business focuses its efforts on the potential market rather than solely on legal sales. Whitney sees growth potential beyond what is currently projected, particularly with the hemp-derived beverages that are making their debut on the cannabis market.
Delta-9 drinks, which are hemp-derived cannabis products, have been gaining popularity, he noted, adding that these beverages are now available in “bars and liquor stores as well as restaurants, grocery stores and supermarkets.”
Whitney claims that the legislative approach to hemp cannabinoids has had unintended effects on the hemp industry as a whole. Confusion also exists in the grain and hemp sectors which are unrelated to products that cause addiction.
Whitney claimed that banks are “debanking” hemp-fiber and hemp-grain companies. Whitney claimed that investors are pulling back from infrastructure investment.
Whitney determined that these laws cost the economy between $20 billion and $25 million dollars. The author added that his “acreage projections through 2030 have been reduced by 4,000,000 acres.”
Whitney estimates that farmers will lose between $1.5 billion and $3.55 billion of revenue.
In 2019, the licensed hemp acres dropped to only 30,000 acres. This decline indicates that there aren’t sufficient acres in the United States to sustain the hemp-cannabinoid manufacturing industry.
Whitney explained that the Chinese CBD was laden with heavy-metals, creating additional safety concerns for consumers.
Ironically, he said that some policies that are supposed to increase public safety may actually do the opposite. “The whole legislative goal of having increased public safety … all their policies are running against that, and they’re actually increasing the public safety risk rather than decreasing it.”
Whitney, who has advocated product regulation over wholesale bans for years, says that age restrictions and testing requirements would suffice, as well as proper labeling.
It’s that simple, he told me.
In addition, the current regulatory approach, he said, creates a false binomial.
The dispensary system for marijuana has failed. He said it was a failure, because the model limits people’s ability to access marijuana. Not everyone is interested in going inside.
Whitney said that the declining prices of corn, soybeans, wheat and other staple crops has led to farmers looking for alternatives with higher returns. Hemp represents not only potential increased revenue per acre but also agricultural benefits – if the industry is actually allowed to develop.
Whitney said that hemp is an excellent rotation crop, because it improves the soil and removes impurities. He said that using hemp as a rotation crop can boost the output of soybeans in subsequent years “on an important bushel basis.”
Whitney, despite the difficulties, still predicts the potential for growth. She projects “a million acres by 2030 which will be twice as large at the peak.”
The FDA has been blamed by many for the confusion created in the regulation. They have taken an uninvolved approach, and this uncertainty is a result of their lack of action. Whitney hoped that the farm bill would provide more clarity. However, he said the bill “has been delayed a few times.”